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  • Carl Icahn Spells The End Of An Era At Apple [View article]
    Speaking with authority on the business, per se, has never been a requisite for Icahn nor for activist investors, in general. His tonal volume won't be controlled by grasp of the business. It will be controlled by emotion and how much pushback he receives.

    The requisites for activists is always related to issues of governance, undervaluation, corporate malfeasance, etc.. Ackman bought it to a different vista with Herbalife and cited societal and cultural issues in addition to criminality with regard to the business model.

    Buffett on the other hand is someone who has repeatedly stated that he only gets involved with companies that he understands. Buffett seeks to grow already good companies and grow with them. He looks for strengths that could get even stronger. The activists look for weaknesses and the ability to exploit.
    Aug 14, 2013. 09:09 AM | 2 Likes Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    What is the root driver of the "large purchase" then? Clearly, it is to make money, but how? There's never been any suggestion that Apple is laden with waste or that it is operationally a disaster that has stifled stock growth, or that insiders are enriching themselves on the backs of shareholders.

    Those are the classic reasons Icahn gives for entering a company.

    Is Apple undervalued? Perhaps, but not because of the typical reasons. The real drag on multiples is cash. In the past decade Apple could count on price growth on the basis of new product introductions. That path isn't quite as assured anymore, so the next path is price multiple expansion through financial optics.

    So what does Icahn bring and what does he want? He really brings nothing that drives Apple itself forward. There are no governance issues, there are no corporate horror stories. This is simply a fat, easy target with no really great reason to be holding so much cash. The rainy day that Jobs saved for will never be as big as the cash reserves can cushion.

    Buying back shares increases P/E and also reduces total dividend payments if the shares are retired or canceled. If they are truly undervalued, a buyback is an excellent way to have cake and eat it, too.
    Aug 14, 2013. 08:49 AM | 1 Like Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    Thank you. Truth be told, I didn't fare terribly well in those, at least not on an intellectual level. Having gone to college during an era of grade inflation my graded performance in those classes was in no way reflective of my intellectual growth in their classrooms.
    Aug 14, 2013. 08:35 AM | 1 Like Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    If the position is $1 billion, as widely reported, then the actual money isn't enough to move the needle, but the Icahn presence has lots of cache.

    It's hard to discount the impact the announcement of his position had on stock price when you look at the precise moment of its release and the start of the Apple price surge. To suggest that it was coincidence is hard to agree with.

    I'm also not certain that Jobs was "a plain moron" in any regard, including capital allocation. Having been on the bottom and having had little cash reserves, he had an appreciation for its power and the independence that it provides a company. Additionally, with growth of overseas operations and sales, the current US tax law provided him with little outlet for the use of all of his growing cash.
    Aug 14, 2013. 07:58 AM | 2 Likes Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    I agree that there is an emotional component, but it comes in two camps.

    There are those that believe in the special place that the company holds in the history of technology and as a rebel in design and innovation.

    Then there are those that are committed to it as a profit vehicle. Those would welcome any action to enhance share value.

    Remember, there was a split between camps even insofar as initiating a dividend. One camp thought that counter to its culture and history and the other could care less.

    But I don't think Carl Icahn wants to destroy the company. He just wants to wring out greater value from its cash which he believes would cause a P/E expansion.
    Aug 14, 2013. 07:52 AM | 3 Likes Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    Thanks, but I have to give credit to my wife.

    In her case, it was in regard to our kids. Her opinion was that when someone complimented you on your children's behavior you should take all of the credit, because you know that you will catch all of the blame for an perceived mis-deed on their part.
    Aug 13, 2013. 11:28 PM | 2 Likes Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    I think the short term trend will be higher, at least compared to the S&P 500. I'm as interested as you to see the action in the pre-open, but I don't expect another quantum leap higher and it appears that there may be some small resistance at the $510-515 level.
    Aug 13, 2013. 11:09 PM | 1 Like Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    If it would have been said with conviction, I would have said "Having your hands in so many product lines is a double edged sword.," rather than using the word "can."

    The potential for disruption is always there, but Apple could be the one disrupted. It has already demonstrated that such is possible.

    The further far flung it gets in product lines the lower the margins become and the greater chance fro contagion in the event of a product lapse.
    Aug 13, 2013. 10:06 PM | 1 Like Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    Only if it was in response to your questioning my being cynical regarding the then current Apple share price at any point from May 2012 to February 2013. Either that or your memory is playing tricks on you.
    Aug 13, 2013. 10:00 PM | 1 Like Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    It is, as I said, a trade. Not an investment. Apple has been a trade for the past 6 months and this adds to its suitability as an in and out kind of position.
    Aug 13, 2013. 09:55 PM | 5 Likes Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    Thank you.

    I usually deal in weekly and monthly time frames since I tend to sell covered options, so I rarely think 6 months ahead.

    Additionally, I also tend to think in comparative terms, wanting my positions to at least do as well as the S&P 500.

    With those caveats, I think that Apple will out-perform the S&P 500, but it will need more than a Carl Icahn catalyst to get to $600 in your time frame, especially if you believe that there is an overdue market correction in the future, so I'd be really reluctant to make that prediction.

    Please be prudent with buying options. Although it can offer incredible leverage, that works in both directions and can decimate an account's value. I'm not certain you can describe buying options as a "sit back and relax" kind of venture. A 2015 option will have lots of time value and won't be quite as responsive to price movements so far ahead of its expiration date. In addition each passing day is a loss of some option value.

    On the other hand, I love selling long term options to people, especially if there is a healthy dividend. That way I get to pocket the option premium and usually keep the dividend, as well, all while the stock's price is drawn further from the strike, as a result.

    In Apple's case, remember that by January 2015 there will also be at least $15 in dividend payments that will bring shares further from your strike price. All of those things conspire against you.
    Aug 13, 2013. 09:53 PM | 5 Likes Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    That's very interesting and a great insight into what may be a way for Apple to extricate itself.
    Aug 13, 2013. 09:17 PM | Likes Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    I hate it when I'm almost in full agreement.

    So many lose sight of other investing opportunities and you beautifully pointed out (and quantitatively, as well) just how possible it was to emulate and surpass the price behavior of a sainted stock.

    In fact, there was life after Apple.

    As far as Icahn goes, you're right and any Apple venture would probably be the greatest testament to Icahn's modus operandus.

    I don't share your pessimism regarding Apple's chance for long term innovation in the event Icahn exacts cash from the pile. After all, the cash isn't being put to much use anyway, as it is. Icahn will move on and so will Apple.
    Aug 13, 2013. 09:14 PM | 1 Like Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    Weak hands may yet get shaken out as the one year anniversary approaches for those that bought shares at the top and are in need of making a decision regarding taking short term capital losses. I think that may put a little damper on the enthusiasm as supply stands to be more readily available.

    Of course, that makes it as good a time to buy as any.

    But as far as the market seeing Apple as a retailer, that has been long the situation, having nothing to do with today's events. I simply believe that Icahn's actions confirm the market view that Apple is a retailer and that its P/E is burdened by cash.
    Aug 13, 2013. 08:46 PM | 2 Likes Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    Almost word for word and thought for thought, you have highlighted the kind of arguments that were made for Apple back when it was at $700 and everyone was calling for it to hit $1000 or higher.

    That all, of course, starts with the P/E argument. It hasn't changed in years. Given the successes of previous products and the inability to move the P/E needle during the decade of great product introductions and ensuing sales records, why would you believe that Apple will now finally be able to break out of its well worn P/E?
    Aug 13, 2013. 08:42 PM | 2 Likes Like |Link to Comment
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